Real Madrid is facing scrutiny over questionable financial activities.
The club has refused to provide further details regarding €122 million.
The deal with Providence may not comply UEFA’s financial controls.
Real Madrid, the Spanish club, is facing scrutiny and concerns regarding questionable financial activities following the release of their latest financial results, according to a reports
Sam Wallace, a journalist at the publication, stated that the club has refused to provide further details regarding the unaccounted 20% of their costs. The recent financial report revealed that around €135 million was allocated to a specific category labeled as “other operating expenses,” with €122 million of that amount remaining unexplained.
Real Madrid has chosen not to respond to inquiries about a deal they entered into during the 2017-18 financial year with a private equity group named “Providence.” Under the agreement, the club received funds in exchange for the sale of future income streams. The deal has been extended and its value has been augmented since then.
Interestingly, the amounts that Real Madrid earned from an undisclosed portion of the future sponsorship, as part of the deal which was renewed in 2019-20, were categorized as revenue rather than debt in the club’s financial records.
It is important to highlight that there is no evidence or suggestion that implies any illegality regarding the deal with Providence. The concern lies in whether the agreement complies with UEFA’s financial controls.
The issue at hand is whether clubs should be permitted to classify future revenues as marketing income rather than debt, especially in an era where state-owned clubs like Manchester City are facing intense scrutiny for breaching financial fair play regulations.
It should be noted that the Spanish tax authorities view such payments as debt rather than revenue.
This irregularity has sparked significant questions within the football community, particularly because Real Madrid was one of the few clubs that remained financially stable even during the challenging period of the Covid-19 pandemic.
Real Madrid recently announced the acquisition of highly talented Turkish player Arda Guler, finalizing the transfer for a fee of €18 million plus potential additional payments. The deal also includes a sell-on clause, allowing Real Madrid to benefit from any future sale of the player.
This signing adds to Real Madrid’s already active summer transfer window, during which they have secured the services of four other players. Fran Garcia was purchased from Rayo Vallecano for €3 million, Brahim Diaz returned to Real Madrid following a three-year loan spell at AC Milan. Additionally, Jude Bellingham was acquired from the German club Borussia Dortmund for a record-breaking fee of €103 million, while Joselu joined on a one-year loan from Espanyol.
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